​ERCOT’s power market is well into a decade of structural change. Beginning with wind and now accelerating through solar and batteries, the shift has already reshaped wholesale pricing. Demand growth, federal-policy-influenced capacity buildout, and continued scaling of storage are now reshaping not just the level and shape of prices, but when and where value is created across regions and technologies.

Tax credits have been a major catalyst driving this transition, and the OBBBA is accelerating its next phase. By bringing forward the Inflation Reduction Act’s (IRA) tax credits expiration for wind and solar, it compresses years of planned development into a narrow construction window, front-loading new renewable capacity into 2026–2028. This is followed by a deployment lull in the late 2020s as incentives expire and the pipeline thins. Combined with rapid demand growth, this supply-demand imbalance is the primary driver of the price trajectory that follows.

The result? Daily price spreads widen and TB2 peaks above $110k/MW-year by 2028. The market tightens further before the next wave of additions arrives, briefly driving around-the-clock (ATC) wholesale prices above $115/MWh in 2033. By the late 2040s, TB2 spreads settle around $50k/MW-year, and the daily price shape looks fundamentally different from today.

This article covers Modo Energy's ERCOT fundamental market outlook for Q4 2025.

Executive Summary